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MU Q4 Earnings Call Points to Tighter Supply and Higher Investment
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Key Takeaways
Micron expects DRAM and NAND markets to remain supply constrained through calendar 2028.
MU plans higher fiscal 2027 CapEx, with more spending aimed at construction and cleanroom capacity.
Micron has 26 strategic customer agreements covering more than 35% of estimated revenues through 2030.
Micron Technology, Inc. (MU - Free Report) used its fiscal fourth-quarter 2026 earnings call to emphasize a tighter memory supply backdrop, stronger customer commitments and heavier investment to expand capacity.
Management also framed fiscal 2027 as another record year, with sequential revenue growth expected each quarter and supply constraints projected through calendar 2028.
MU Sees Supply Tightness Extending Through 2028
Sanjay Mehrotra, chairman and CEO, said memory and storage supply-demand conditions should be much tighter in calendar 2027 and 2028 than in 2026.
He expects industry DRAM bit shipments to grow in the low-20% range in both years, while NAND bit shipments grow in the mid-20% range. Micron expects both markets to remain supply constrained.
Mehrotra added that the company does not have line of sight to when supply and demand will return to balance, citing robust demand and the time required to add cleanroom capacity.
Micron Raises Fiscal 2027 Investment Plans
Mehrotra said Micron plans to increase fiscal 2027 capital expenditures versus prior plans, with most of the increase directed to construction and faster cleanroom availability in late calendar 2028 and beyond.
Mark Murphy, executive vice president and CFO, said first-half fiscal 2027 CapEx is expected to be about $25 billion, including roughly $11.5 billion in the first quarter. Second-half spending is projected to be higher.
Murphy said construction CapEx should grow meaningfully faster than equipment spending as Micron builds capacity while retaining flexibility on equipment timing.
MU Builds More Revenue Visibility Through SCAs
Mehrotra said Micron has signed 26 strategic customer agreements, or SCAs, representing more than 35% of estimated revenue through 2030.
Financial commitments tied to the agreements have increased to $32 billion, mostly in cash deposits. Murphy said remaining performance obligations are about $150 billion for agreements with determined pricing frameworks.
During Q&A, Mehrotra clarified that more than 75% of Micron's 2027 output is already committed across SCA and non-SCA customers, while discussions increasingly center on 2028 demand.
Micron's HBM and Data Center Mix Stay Central
Mehrotra said the vast majority of Micron's calendar 2027 HBM bit supply is covered by agreements with significant year-over-year price increases, helping narrow the gross-margin gap with conventional DRAM.
He also highlighted continued execution on HBM4 and Micron's work with NVIDIA on a custom HBM4E implementation for next-generation platforms.
In NAND, data center SSD revenues reached nearly $10 billion in the fiscal fourth quarter and represented more than two-thirds of the company’s NAND revenues, reflecting AI-related storage demand.
MU Guides to Another Record Quarter
Murphy guided fiscal first-quarter 2027 revenues of $61.5 billion, plus or minus $1.5 billion, with non-GAAP gross margin of about 86.25% and non-GAAP EPS of $38.15, plus or minus $1.
He said the fiscal first quarter should mark the gross-margin floor for fiscal 2027, with higher margins expected afterward as pricing improves and temporary cost pressures ease.
For fiscal fourth-quarter 2026, Micron reported non-GAAP EPS of $33.42, which beat the Zacks Consensus Estimate of $31.61. Revenues of $54.23 billion also topped the $51 billion consensus estimate.
Micron Technology, Inc. Price, Consensus and EPS Surprise
Micron Faces Questions on Cash Returns and Margins
A UBS analyst pressed management on capital returns and target cash levels. Murphy said Micron expects to be around its target cash level by the end of the fiscal first quarter and plans stronger capital returns beginning Dec. 9.
A Cantor Fitzgerald analyst asked about the first-quarter margin decline. Murphy said roughly $1 billion of higher costs, including incentive compensation and startup expenses, are affecting the quarter.
A Bank of America analyst questioned whether tighter supply could persist into 2028. Mehrotra reiterated that customer demand remains strong and new capacity will take time to ramp.
Micron Keeps Capacity Discipline at the Center
Management's message centered on expanding capacity without abandoning discipline. Mehrotra tied the investment program to long-term customer commitments and sustained demand across AI-driven markets.
Murphy reinforced that Micron intends to match equipment deployment to demand conditions while maintaining strong free cash flow and increasing capital returns over time.
MU's Zacks Rank and Style Score Signals
Micron currently carries a Zacks Rank #3 (Hold). Its Growth Score, Momentum Score and VGM Score are all A, while its Value Score is C.
The Style Score framework favors A and B grades, especially when paired with a Zacks Rank #1 (Strong Buy) or #2 (Buy). A Zacks Rank #3 can still be held within that framework, but the current Rank does not carry the same estimate-revision signal as the top two ranks. The Zacks Rank can change as analysts revise estimates after the just-reported results.
View the Zacks #1 Rank List
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MU Q4 Earnings Call Points to Tighter Supply and Higher Investment
Key Takeaways
Micron Technology, Inc. (MU - Free Report) used its fiscal fourth-quarter 2026 earnings call to emphasize a tighter memory supply backdrop, stronger customer commitments and heavier investment to expand capacity.
Management also framed fiscal 2027 as another record year, with sequential revenue growth expected each quarter and supply constraints projected through calendar 2028.
MU Sees Supply Tightness Extending Through 2028
Sanjay Mehrotra, chairman and CEO, said memory and storage supply-demand conditions should be much tighter in calendar 2027 and 2028 than in 2026.
He expects industry DRAM bit shipments to grow in the low-20% range in both years, while NAND bit shipments grow in the mid-20% range. Micron expects both markets to remain supply constrained.
Mehrotra added that the company does not have line of sight to when supply and demand will return to balance, citing robust demand and the time required to add cleanroom capacity.
Micron Raises Fiscal 2027 Investment Plans
Mehrotra said Micron plans to increase fiscal 2027 capital expenditures versus prior plans, with most of the increase directed to construction and faster cleanroom availability in late calendar 2028 and beyond.
Mark Murphy, executive vice president and CFO, said first-half fiscal 2027 CapEx is expected to be about $25 billion, including roughly $11.5 billion in the first quarter. Second-half spending is projected to be higher.
Murphy said construction CapEx should grow meaningfully faster than equipment spending as Micron builds capacity while retaining flexibility on equipment timing.
MU Builds More Revenue Visibility Through SCAs
Mehrotra said Micron has signed 26 strategic customer agreements, or SCAs, representing more than 35% of estimated revenue through 2030.
Financial commitments tied to the agreements have increased to $32 billion, mostly in cash deposits. Murphy said remaining performance obligations are about $150 billion for agreements with determined pricing frameworks.
During Q&A, Mehrotra clarified that more than 75% of Micron's 2027 output is already committed across SCA and non-SCA customers, while discussions increasingly center on 2028 demand.
Micron's HBM and Data Center Mix Stay Central
Mehrotra said the vast majority of Micron's calendar 2027 HBM bit supply is covered by agreements with significant year-over-year price increases, helping narrow the gross-margin gap with conventional DRAM.
He also highlighted continued execution on HBM4 and Micron's work with NVIDIA on a custom HBM4E implementation for next-generation platforms.
In NAND, data center SSD revenues reached nearly $10 billion in the fiscal fourth quarter and represented more than two-thirds of the company’s NAND revenues, reflecting AI-related storage demand.
MU Guides to Another Record Quarter
Murphy guided fiscal first-quarter 2027 revenues of $61.5 billion, plus or minus $1.5 billion, with non-GAAP gross margin of about 86.25% and non-GAAP EPS of $38.15, plus or minus $1.
He said the fiscal first quarter should mark the gross-margin floor for fiscal 2027, with higher margins expected afterward as pricing improves and temporary cost pressures ease.
For fiscal fourth-quarter 2026, Micron reported non-GAAP EPS of $33.42, which beat the Zacks Consensus Estimate of $31.61. Revenues of $54.23 billion also topped the $51 billion consensus estimate.
Micron Technology, Inc. Price, Consensus and EPS Surprise
Micron Technology, Inc. price-consensus-eps-surprise-chart | Micron Technology, Inc. Quote
Micron Faces Questions on Cash Returns and Margins
A UBS analyst pressed management on capital returns and target cash levels. Murphy said Micron expects to be around its target cash level by the end of the fiscal first quarter and plans stronger capital returns beginning Dec. 9.
A Cantor Fitzgerald analyst asked about the first-quarter margin decline. Murphy said roughly $1 billion of higher costs, including incentive compensation and startup expenses, are affecting the quarter.
A Bank of America analyst questioned whether tighter supply could persist into 2028. Mehrotra reiterated that customer demand remains strong and new capacity will take time to ramp.
Micron Keeps Capacity Discipline at the Center
Management's message centered on expanding capacity without abandoning discipline. Mehrotra tied the investment program to long-term customer commitments and sustained demand across AI-driven markets.
Murphy reinforced that Micron intends to match equipment deployment to demand conditions while maintaining strong free cash flow and increasing capital returns over time.
MU's Zacks Rank and Style Score Signals
Micron currently carries a Zacks Rank #3 (Hold). Its Growth Score, Momentum Score and VGM Score are all A, while its Value Score is C.
The Style Score framework favors A and B grades, especially when paired with a Zacks Rank #1 (Strong Buy) or #2 (Buy). A Zacks Rank #3 can still be held within that framework, but the current Rank does not carry the same estimate-revision signal as the top two ranks. The Zacks Rank can change as analysts revise estimates after the just-reported results.
You can see the complete list of today’s Zacks #1 Rank stocks here.